Advantages of loans from public sector banks

Advantages of taking loans from public sector banks

Advantages of taking loans from public sector banks

Generally people have dilemma while taking loans whether they should take it from a public sector bank or approach a private bank.

Here are some advantages of taking loans from public sector banks:

Processing charges on loans are cheaper in the public sector banks or government banks than the private banks. For example, the processing fee on a home loan of up to Rs.25 lakhs, State Bank of India charges 0.25 percent. It is Rs.6500 on the loans of Rs.25 lakhs to Rs.75 lakhs. On the other hand, private banks have a processing fee as high as 1 percent.

Lower interest rate is offered on loans of government banks. The current interest rate of State Bank of India is 9.75 percent on home loans under Rs.1 crore. But it is more in case of private banks. For example, ICICI offers 9.85 percent interest on home loans under Rs.30 lakhs and it is 9.95 percent on home loans above Rs.30 lakhs.


Prepayment charges are heavy for the loans of private banks especially for the personal loans. They are lesser in public sector banks and some banks do not charge prepayment charges.

However, taking loans from public sector banks consumes more time as the processing of loans involves a lot of time than the private banks. The technological advancement is also more in private banks. Furthermore, service-wise private banks offer superior service.

But, if you want cheaper loans and gain monetarily, and have a lot of patience you can take a loan from public sector bank.

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